2006 Review of Boutique Work-Style Payroll Systems

by Isaac M. O'Bannon On Sep 1, 2006

From the September 2006 Issue

Every business has to pay its employees, and, as such, almost every business has to deal with various federal, state and local government entities, whether for reporting or remitting withheld taxes and other payments. The process can quickly become a quagmire for small business owners, especially when penalties for late filing
or payment of liabilities are assessed, or when employees are frustrated by late payments or overdrawn payroll accounts. There are generally three options for these small businesses: (1) Do their own payroll, (2) Outsource it to one of the national companies, or (3) let their public accountant do it.

We know they don’t want the headaches mentioned above, so rule out the first option. The big payroll service providers are adept at what they do but are often impersonal and can’t “turn on a dime” when an urgent issue arises. So then, the best choice for most of these firms is often the third: You, the public accountant. Payroll is a natural fit for the firm that already provides financial services to small businesses, and the good news is that it has become much more automated and a whole lot less time consuming than it used to be, which means it can be a profitable venture for many firms. How the firm decides to implement these payroll services determines what kind of payroll system is needed.

Firms intending to go all out in the payroll services market and make that offering a significant or central part of their profit base will most likely want what we refer to as a service bureau-style system. Such programs were reviewed in our August 2006 issue. Practitioners who are more or less answering the call of a few of their business clients to provide payroll services will likely best be served by a boutique work-style payroll system, as reviewed here. The primary differences lay in the scope of the programs, with the service bureau-style versions geared toward firms specializing in offering payroll services and being capable of efficiently handling many clients with small to very large staffs.

Boutique work-style systems, on the other hand, are generally used by firms offering payroll to a smaller client base as an added service. It can still be a profitable service, but, in addition to the added revenue stream, the accountant sees the service as strengthening the relationship he or she has with a client. The more the accountant keeps his foot in the door of a client’s business, the more that client will come through the accountant’s door for the higher-margin services. From the client’s perspective, the accountant is the most knowledgeable person when it comes to their company’s financials, and if he or she can alleviate the headaches of managing payroll and prevent potential penalties and employee angst, then it’s a no-brainer. I can almost hear them saying, “Take my payroll off my hands, please.”

So it’s a win-win for both the client and the accountant: Offering payroll as an added service strengthens the client relationship, relieves the business owner/management of some possible pitfalls, and provides an added revenue stream for the financial professional. The products reviewed in this section vary in some of their specific features and capabilities. Some are designed to integrate with an accounting package while others are stand-alone or web-based. They all have the ability to automate the client payroll process in order to keep your
clients on the right side of the law while ensuring that their employees are paid.
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After-The-Fact Payroll is an add-on module to Advanced Micro Solutions’ 1099-Etc system. As its name suggests, the payroll module is generally intended to be used as an after-the-fact system, but can also be used for live payroll processing. The program includes 941 e-filing with support for all states...

Known widely for its MultiLedger accounting system, CheckMark Software also offers CheckMark Payroll, which can be used independently or in conjunction with MultiLedger. It supports federal and all state entities, with the ability to print forms W-2, W-3 and 941 on plain paper, as well as support for 940.

Cougar Mountain offers a suite of accounting systems for businesses and nonprofits, along with its Cougar Mountain Payroll, which is operable either as an integrated component of the vendor’s accounting system or as a stand-alone system. The program can support any number of companies with an almost unlimited number of payees...

CYMA Systems makes a wide range of accounting products, including its Financial Management System that includes GL, AP, AR, purchasing, job costing and other essentials, as well as a Client Write-Up and a Not-For-Profit Edition. The company’s payroll module supports direct deposit...

QuickBooks Enhanced Payroll Plus for Accountants offers a comprehensive payroll service solution for accountants servicing up to 50 business payroll clients. The system automatically computes all deductions and prepares tax forms and remittances, supports direct deposit...

Red Wing Software specializes in accounting and business management software for small and midsize businesses, including specialty applications for agricultural and ranching entities. The company’s Red Wing Payroll can be used as part of an integrated accounting suite or used stand-alone...

PayCycle is an online payroll processing system that can be used directly by small businesses or used by accounting professionals to offer the service to their clients. Through the Wholesale Program, professionals are given discounted rates and a firm-branded product so that the service is offered transparently to the end customer..

Adagio Accounting was launched in 1999 to attract
former ACCPAC Plus for DOS users who had not yet made the move to Windows,
offering such users a straightforward migration to the Windows environment.
It is targeted at small to midsize businesses with over $1 million in
sales/revenue, particularly former ACCPAC Plus for DOS users or those
looking to move upscale from an entry-level package.

Managing payroll for even a single business can be a headache, especially as the entity grows more complex and its reporting requirements grow correspondingly more intricate as a result of expansion into additional states or taxing jurisdictions, the establishment of employee benefit plans, benefits administration, direct deposit, third-party payments, union interaction, etc.